A tax can only be levied on the sale price of goods, and not on the purchase price of goods.

This petition under Article 226 of the Constitution is directed against an assessment order and a demand notice (annexures A and B) made by the Assistant Sales Tax Officer, Nagpur Circle, assessing the petitioner to sales tax on a sum aggregating to Rs. 35,008-14-0 and for writs quashing the same and directing the Assistant Sales Tax Officer to delete the said sum from the assessable quantum.

2. The facts of the case are simple. The petitioner runs a yarn shop and a dyeing factory under the name and style of Ramsaran Ramsahai at Nagpur. He is a registered dealer for the purposes of the Central Provinces and Berar Sales Tax Act, 1947. The petitioner submits that he carries on the business of purchasing and selling undyed yarn only. In his factory, however, the petitioner dyes yarn for his customs and for this purpose purchases dye-stuff, which he uses for this business. In the course of assessment proceedings pertaining to the period 10th November, 1950, to 30th October, 1951, (i.e., Diwali to Diwali) the petitioner was called upon to furnish the figures of the total purchase price of dyes and chemicals for use in his factory. The petitioner complied with the request and furnished the list of his purchases amounting in all to Rs. 35,008-14-0. The amount is not in dispute.

3. The Sales Tax Officer then by his order, now impugned, added this amount to the petitioner's turnover purporting to act under rule 20A of the Central Provinces and Berar Sales Tax Rules, 1947, and levied sales tax on that amount. The Sales Tax Officer also issued a demand notice calling upon the petitioner to pay a sum of Rs. 812-0-6 as tax thereon. The petitioner contends that these demands were illegal and that rule 20A is ultra vires of the State Government inasmuch as it runs beyond the charging section as well as the rule-making powers granted to the State Government by the Act. The petitioner further contends that the levy of the tax is tantamount to a tax on purchase when the intention of the Act is to levy a tax on sales. The petitioner contends that such a levy cannot be made in view of the clear provisions of Articles 265 of the Constitution, and that there being no equally efficacious remedy the present petition should be granted and an appropriate writ or writs be issued.

4. On behalf of the sales tax authorities as well as the State of Madhya Pradesh the learned Government Advocate contended, as a preliminary objection, that the present petition was not competent in view of the fact that the Act provides adequate remedies, which have not been exhausted. As to this, it is sufficient to say as was done by the Division Bench in Miscellaneous Petition No. 279 of 1954 decided on 30th November, 1954 (Since reported as Pandit Banarsi Das v. State of Madhya Pradesh and Others [1955] 6 S.T.C. 93), that if any portion of the Act or the Rules be found to be illegal or ultra vires, a writ can issue prohibiting the authorities from utilizing the illegal provision against an assessee. The dispute here is really whether rule 20A is intra vires or not. If the rule be found to be defective and unenforceable there is no reason why a writ should no be issued on the analogy of the decision of their Lordships of the Supreme Court in Himmatlal v. State of Madhya Pradesh ([1954] 5 S.T.C. 115; A.I.R. 1954 S.C. 403). We therefore, do not think that there is any force in the preliminary objection raised.

5. The contention of the petitioners on the main case is that the dye-stuffs and chemicals purchased by him are not sold by him to the customers but that they are utilized for dyeing yarn brought by the customers, for which a price is charged without there being a separate price for the dye-stuffs. This argument is similar to the one repelled is Miscellaneous Petition No. 279 of 1954 (Since reported as Pandit Banarsi Das v. State of Madhya Pradesh and Others [1955] 6 S.T.C. 93). If the contract of dyeing yarn involves therein the transfer of property in dye-stuff